The importance of using an EMI calculator when applying for a personal loan

Before one applies for a personal loan, there are several factors that one needs to prepare for. The most important part of any loan process is the repayment. A personal loan tends to have a higher interest charge making it crucial for one to plan in advance how to manage their finances. Most banks try to ensure that the loan amount does not burden the individual to such an extent that they are not able to repay the loan. Personal loans do not require any type of collateral and hence banks try to ensure that the EMI charge for each month does not exceed more than 60 percent of the borrower’s salary.

A loan applicant can make use of the bank’s personal loan EMI calculator to find out the amount they will be required to pay each month as EMI. This will help the applicant plan out in advance how to make use of their finances to avoid getting any defaults by the bank. The calculator will also help the borrower understand whether or not they will be able to afford the EMI payments.

A borrower must review their monthly expenses to see where all they can cut down on unnecessary expenses. If a borrower is spending too much money on eating out, they can simply cut down on the expense by opting to eat at home. One must also avoid making any big expenditure during the months of the loan repayment to avoid adding pressure on their finances.

One can also use a personal loan EMI calculator to predict the EMI charge on a floating interest rate. If a borrower opts for a floating interest rate on their personal loan, predicting EMI payments can be difficult. However, one can use the personal loan EMI calculator to calculate an estimate as to how much one can expect to pay based on different interest rates. To do this, the borrower must take an estimate of the possible positive and negative changes that one can expect in the interest rate. Using these interest rates one can calculate and optimistic and pessimistic EMI amount which will help one prepare in advance for the repayment. This is extremely important as any failure in the repayment of the loan can lead to defaults which seriously affect one’s credit score. This in turn will have an impact on the borrower’s future plans to apply for loans.

A borrower must make use of the personal loan EMI calculator as it is provided free of cost by the bank. The device helps one effectively plan their repayment options before the repayment of the loan process has even begun.